The Opportunity of Network as a Service for Telcos: Unlocking New Revenue Streams and Industry Insights

Introduction

As described in our first article in this series, Network as a Service (NaaS) is emerging as a transformative model that offers significant opportunities for telcos. By shifting from traditional network infrastructure to a more flexible, scalable, and cost-efficient NaaS model, telcos can unlock new revenue streams and enhance their competitive advantage. This article explores the potential opportunities and revenue projections for telcos in the NaaS market.

Opportunities for Telcos in NaaS

1. New Revenue Streams: NaaS allows telcos to offer flexible, API-driven platforms, enabling them to provide value-added services. For example, a mobile provider could offer temporary bandwidth expansion directly for outside broadcasts in the media industry. This creates new monetization avenues and diversifies their offerings.

2. Selfcare and Self provisioning: By creating a service portal that drives internal network automation, customers can easily acquire, configure and control their own service. The back end of this automation coming from an API driven infrastructure. This is a key enabler for continued B2B and B2C customer engagement as opposed to a B2B2B or B2B2C one step away approach, where a third party owns the customer relationship.

3. Scalability and Flexibility: NaaS provides the ability to scale network resources up or down based on demand, without extensive upfront investments. This flexibility is crucial for businesses with fluctuating network needs, such as those in the IoT industry during software upgrades over the air.

4. Enhanced Customer Experience: With NaaS, telcos can offer more reliable and customizable connectivity solutions, improving customer satisfaction and loyalty. This can lead to higher retention rates and positive word-of-mouth, further driving revenue growth.

Potential Revenues for Telcos

According to a bottom up study by STL Partners the following revenue streams can come from NaaS propositions.

1. Secure Cloud Connect: Offering secure connections to cloud services can be a lucrative revenue stream. As businesses increasingly migrate to the cloud, secure and reliable connectivity becomes essential, presenting a significant opportunity for telcos.

2. Network APIs: Telcos can monetize network APIs by providing connectivity and edge computing services. Estimates suggest that telcos could unlock up to $100 billion in net-new revenue by 2030 from network APIs alone, according to STL Partners.

3. IoT Solutions: As the Internet of Things (IoT) continues to grow, telcos can offer IoT solutions, further diversifying their revenue streams. IoT devices require consistent and reliable connectivity, which NaaS can provide, making it a valuable market for telcos.

4. Hybrid Private Networks: Providing hybrid private networks can cater to enterprises looking for secure and reliable connectivity solutions. This segment is expected to see significant growth as businesses seek to enhance their digital infrastructure.

NaaS Example use cases

Multi-Cloud Connectivity 🌐

A telco-provided portal enables customers to orchestrate and manage their multi-cloud connectivity, showing costs, rebalancing traffic, and provisioning additional capacity on demand. This leverages Network-as-a-Service (NaaS) APIs under the hood, empowering enterprises with self-service capabilities.

AI Applications at the Edge 🧠

Enterprises can deploy AI applications into edge compute, automating application orchestration and allocating resources to serve customers. This solution removes the need for network knowledge and uses NaaS Network APIs to provide workload orchestration, making it easier than ever to harness the power of AI at the edge.

Outside Broadcast Connectivity on Demand 🎥

Media and broadcast companies can access on-demand slices of network with guaranteed Quality of Service (QoS) through an operator portal for given locations and times. This enables seamless broadcast operations, leveraging NaaS Network APIs to ensure reliable and efficient connectivity.

Over-the-Air Software Updates for Connected Cars 🚗

Automotive companies can schedule over-the-air software updates for their fleet in a coordinated way with network operators. This ensures the best use of network resources without the need to understand network complexities, utilizing NaaS Network APIs automated by the portal to facilitate seamless updates.

Self provisioned hybrid 5G private networks 📶

A large national corporation with sites scattered across different regions and geographies, each having its unique networking requirements. A hybrid 5G private network, offered as a Network-as-a-Service (NaaS), can seamlessly integrate these diverse needs by leveraging a slice of the public mobile network alongside dedicated private 5G radio and potentially on-premises network components for enhanced security and reduced latency. Services can be automatically provisioned and controlled by the customer using NaaS API based automation.

Industry Projections

1. STL Partners Report: Estimates that communications service providers (CSPs) could unlock $100 billion in net-new NaaS revenue by 2030. This includes revenue from network APIs, secure cloud connect, IoT solutions, and hybrid private networks. More details can be found in their webinar and article.

2. McKinsey & Company Projection: Suggests that telcos could earn between $100 billion and $300 billion in the next five to seven years from network APIs alone. Additionally, another $10 billion to $30 billion could come from the sale of APIs themselves. More information can be found in their article.

3. ABI Research: Predicts that the NaaS market could be worth up to $150 billion by 2030, with telcos potentially capturing up to $75 billion of that market. You can read more about their findings here.

These are in many cases full value chain market evaluations, so whilst offering 3rd party access to API's, it is important that Telco's don't just become an API driven connectivity network and look to offer their own services, as suggested in the services examples above.

Conclusion

The transition to a NaaS model presents a compelling opportunity for telcos to unlock new revenue streams, enhance cost efficiency, and improve customer experiences. With industry projections highlighting the potential for substantial revenue growth, telcos that embrace NaaS can position themselves as leaders in the evolving telecommunications landscape. By leveraging secure cloud connect, network APIs, IoT solutions, and hybrid private networks, telcos can capture a significant share of the NaaS market and drive their future success.

Want to know more? connect with our Network Transformation practice.

Author Gareth Price-Jones